The Obama administration’s Home Affordable Modification Program has helped more than 15,000 homeowners in metro Atlanta avoid foreclosure over the past two years.
But the program has been criticized by lawmakers, an inspector general’s report and local homeowners like Steve Anderson who think it is a failure.
When Anderson took a job as a bartender in 2009 after he’d lost his job as a carpenter, the government’s modification program was brand-new. He didn’t know much about it, and in hindsight he thinks his lender didn’t either.
“They told me they could help me, and I believed them,” he said. “And, really, they couldn’t help me because I didn’t have any income. I wish they’d just told me that in the first place.”
But Elaine Dent, one of the 15,000 Georgians who have been helped by the program, said it has its benefits.
“I need to sit down and write the president a thank-you letter,” she said. “I might have lost my house without it.”
In February 2009, President Barack Obama announced the Making Home Affordable Program “to help families restructure or modify their mortgages to avoid foreclosure,” according to a program summary. A product of that effort, the Home Affordable Modification Program was supposed to modify first-lien mortgages, making payments more affordable and sustainable over time.
Across the country, more than 4.1 million modification arrangements were started between April 2009 and the end of 2010, according to the January Housing Scorecard. As of the end of January, there had been about 600,000 permanent modifications made nationwide, the Treasury Department said.
The department has acknowledged the program won’t meet its original goal of preventing 3 million to 4 million foreclosures, and in the U.S. House, the Financial Services Committee said last week it plans legislation to terminate the program.
“It is a terrible thing to say, but quite frankly the program has not been helpful and has postponed what in many cases has been inevitable,” said U.S. Sen. Johnny Isakson, R-Ga. “If you look at the statistics, two out of every three people it tries to help, it hurts. That’s not a very good batting average.”
Dent vehemently disagrees. “People need this help,” she said. “I don’t know what I would have done without it.”
“I don’t know how we’re hurting two out of three people,” said Steven Adamske, a Treasury Department spokesman. “We’re either able to help them or not. Not being able to help them is not the same as hurting them.
“I think if we are helping one-third of the people, that’s not bad,” he said. “And I wonder how many Atlanta Braves have had a .333 batting average and that’s been a bad thing.”
The October 2010 and January 2011 quarterly reports from the Office of the Special Inspector General for the Troubled Asset Relief Program were highly critical of the mortgage modification program.
The report said the Treasury Department’s foreclosure prevention effort, HAMP, has been “beset by problems from the outset and, despite frequent retooling, continues to fall dramatically short of any meaningful standard of success.”
As of December, metro Atlanta was No. 8 in the country in HAMP activity, according to data from the Treasury Department. More than 19,828 metro Atlanta mortgages had cycled through the program, with 15,316 mortgages having been permanently modified. There were 4,512 active trial modifications.
But Anderson isn’t represented in those statistics. With a March auction date set for his home, Anderson’s trial modification has been over for months and he’s now in limbo, wondering what will happen next.
“They told me when my trial period was over that I’d hear something, but I haven’t,” he said. “I’ve called, but you can’t ever get anybody who knows anything about your case.”
Communication between lenders and borrowers has been a problem from the beginning, said Anna Mackowiak, a staff attorney in the Home Defense Unit of the Atlanta Legal Aid Society. “It can be a nightmare when people call and try to find out anything,” she said. “I know that because it is a nightmare for me when I call on behalf of a client.”
Scott Wicks of Winder calls the application process “insane.” “They tell you don’t wait until it’s too late, so I called them before I got behind to let them know I’d lost my job,” he said. “At first they told me they couldn’t help me because I wasn’t behind, and then I got behind and then things began to snowball downhill.”
Wicks was a sanitation truck driver before he lost his job. The $330 a week he was getting in unemployment wouldn’t cover his $1,200 mortgage.
He said he successfully completed a three-month modification, but at the end of the trial he was told he didn’t qualify for a permanent adjustment.
“They said they were missing my 2008 and 2009 tax returns,” he said. “I told them I didn’t have returns for those years because I was out of work and didn’t file. They told me to get a letter from the IRS saying I didn’t have to file. Who gets that kind of letter from the IRS?”
Wicks estimated eight to 10 of the 24 homes in his subdivision have undergone foreclosure or distress sales. He’s pretty sure his home will be next.
“I’m still hoping for better days, but I don’t think those days are going to be in this house,” he said. “It’s not if I’m going to lose the house, but when I’m going to lose the house.”
Anne Cooper of Marietta had those same fears, but was determined not to lose her home. “I ended up using money I’d set aside to pay my taxes,” the paralegal said. “Now I’m nervous about filing my income tax, but at least I have my house.”
Cooper lost her job around November 2008. She ran into trouble after she was granted a six-month trial modification in March 2010. Toward the end of her trial, she was notified that she would not receive a permanent modification.
According to the approval matrix, Cooper’s former income was .5 percent higher than the allowable limit.
“So then I started getting notices of acceleration of foreclosure,” she said. “It was just crazy. I was doing the best I could, but that wasn’t working.”
Cooper said the most frustrating part was the lack of customer service from her lender.
“I wanted to make it right, but I just needed somebody to work with me,” she said.
That’s all a lot of people are looking for, said Mackowiak, the legal aid attorney.
“There are people who really want to pay; they’re just in a bad financial situation and can’t for one reason or another,” she said.
The program is a great idea, Wicks said. It just doesn’t seem to work as intended — or like he thought. “I think that’s why the number of successful participants is so low,” he said. “I don’t think it was really designed for those who are unemployed, because from my experience you’ve basically got to be in a situation where you can be reapproved to repurchase that house all over again. That’s not my situation.”
About the Author
